Correlation Between Caledonia Mining and DXC Technology
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and DXC Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Caledonia Mining and DXC Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and DXC Technology Co, you can compare the effects of market volatilities on Caledonia Mining and DXC Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Caledonia Mining with a short position of DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and DXC Technology.
Diversification Opportunities for Caledonia Mining and DXC Technology
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caledonia and DXC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology and Caledonia Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Caledonia Mining are associated (or correlated) with DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and DXC Technology go up and down completely randomly.
Pair Corralation between Caledonia Mining and DXC Technology
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the DXC Technology. But the stock apears to be less risky and, when comparing its historical volatility, Caledonia Mining is 1.42 times less risky than DXC Technology. The stock trades about -0.01 of its potential returns per unit of risk. The DXC Technology Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,667 in DXC Technology Co on August 31, 2024 and sell it today you would lose (426.00) from holding DXC Technology Co or give up 15.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.95% |
| Values | Daily Returns |
Caledonia Mining vs. DXC Technology Co
Performance |
| Timeline |
| Caledonia Mining |
| DXC Technology |
Caledonia Mining and DXC Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and DXC Technology
The main advantage of trading using opposite Caledonia Mining and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, DXC Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in DXC Technology will offset losses from the drop in DXC Technology's long position.| Caledonia Mining vs. Hollywood Bowl Group | Caledonia Mining vs. XLMedia PLC | Caledonia Mining vs. Grand Vision Media | Caledonia Mining vs. Atresmedia |
| DXC Technology vs. Gamma Communications PLC | DXC Technology vs. Charter Communications Cl | DXC Technology vs. HCA Healthcare | DXC Technology vs. Global Net Lease |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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